Motech Industries Inc (茂迪), the nation’s biggest solar cell maker, yesterday posted lower net profits for the first six months as rising material prices and massive foreign exchange losses from a strengthened local currency eroded margin.
Net income dropped 32 percent to NT$874 million (US$27.8 million) in the first half of the year, compared to NT$1.29 billion a year ago, a company filing to the Taiwan Stock Exchange said.
“That is mainly because of foreign exchange losses in the first quarter,” company spokesman Jacy Chen (陳家淇) said by telephone. “The losses have contracted significantly.”
Foreign exchange losses narrowed to NT$2 million in the second quarter, from NT$428 million in the first quarter, after the company took more hedging measures against local currency movement versus the US dollar, Chen said.
Gross margin fell to a record low of 15.4 percent in the first half of the year, down from 21.34 percent a year earlier.
“Constant price hikes by raw material suppliers are a major factor behind the decrease,” Chen said, without offering detailed figures.
The decline was bigger than the expectation of Yuanta Securities (元大證券). Yuanta forecast gross margin to fall to around 16 percent in the first two quarters, a report dated Aug. 13 showed.
The local securities house upgraded Motech to “hold” from “sell” earlier this month, as all negative factors should have been priced in and the company is getting new polysilicon supplies and a new production line in China next month.
Chen said that allocating profits for employee bonuses had also driven gross margin lower.
Motech has booked NT$100 million for employee bonuses in the first six months to fulfill a new accounting rule taking effect this year. The solar cell maker plans to allocate 16 percent of its annual net income for employee bonuses.
Revenues expanded 57 percent year on year to NT$11 billion, hitting a record high, as demand rose after more countries announced new subsidies for solar-cell devices amid rising oil prices and growing environmental awareness.
Separately, Motech said it has signed agreements with DC Chemical Co to buy US$168 million in polysilicon from the South Korean company in the next eight years.
The deals aim to secure sufficient supply of polysilicon and wafers for the company’s production in the future, Motech said in a filing to the Taiwan Stock Exchange.
In May, Motech said it had secured 80 percent of the polysilicon the company needs to produce 280 megawatt solar cells this year.
Under the contracts, DC Chemical will begin to supply polysilicon to Motech next year.
Motech’s stock price increased 1.23 percent to NT$165 following the announcement yesterday, versus the benchmark TAIEX index’s 1.72-percent rebound.
Local rival E-Ton Solar Tech Co Ltd (益通光能) slid 2.47 percent to NT$276.
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